As investors cash out, opportunities increase for first home buyers
Before the Reserve Bank of New Zealand makes its last decision on the official cash rate for 2022, taking place on November 23, a mortgage adviser says his clients have more questions than ever before about interest rates.
Economists have predicted another consecutive 50 basis point rise to the OCR when the RBNZ board next meets, potentially taking the OCR to 4%, its highest rate since 2008.
Loan Market Paramount managing director and chief adviser Nathan Miglani (pictured above) said 90% of his clients have been asking him how long they should fix their mortgage for.
Read next: How long should Kiwis lock their mortgage rates to avoid high interest rates?
“Right now, everyone is asking if rates will keep rising in 2023 and if so, when will the rises stop,” Miglani said. “It could be a very painful time ahead and I have many clients stressing about what is to come.”
Miglani said he was seeing a trend among clients who were listing an investment property for sale they might have only purchased within the last five years and are now selling it because the market had moved so quickly.
“These clients are happy to sell and make some money while they can. Many of these clients who purchased investments are now paying a much higher interest rate then they previously were, so with the cost of everything including their mortgage rising, they are cashing out now,” he said.
“I recently attended a property investment seminar in Christchurch where economist Tony Alexander came and spoke. In his speech, he said the RBNZ would do whatever they can to keep inflation under control and ensure our country is heading in the right direction. At the end of the day, the fundamentals of our economy is to not go into a recession.”
Miglani said despite the consistent interest rate hikes, his team were very busy fielding first home buyer enquiries and applications.
Read next: NZ housing prices post first annual drop since 2011
“We are finding they are taking full advantage of the 5% first home deposit scheme, meanwhile investors are stepping back and not buying at the moment,” he said. “Now that investors have retreated from the market, I believe it is a golden opportunity for a first home buyer right now to buy.”
Miglani said it was most certainly a buyer’s market right now.
“Banks are hungry and fighting for new business, which is refreshing. Many are promoting 1% cashback offers which is great for our clients and by throwing this much cash to support new clients, provides a great incentive,” he said.
“There is so much opportunity for first home buyers in the current market because they have more choice. Thanks to the booming job market, everyone has had a wage rise in the last few years, which helps us as advisers get client approvals over the line. Once high inflation is reigned in, it will get things back on track, which will be welcomed by many people.”
